Capital Gains Tax on Selling a Rental Property: Rates, Deadlines and What You Actually Pay

What counts as your gain

The gain isn’t simply your sale price. Broadly, it’s the sale proceeds, less:

• your original purchase price;
• allowable costs of buying and selling, such as legal fees, estate agent fees and Stamp Duty Land Tax paid on the purchase;
• the cost of qualifying capital improvements you’ve made to the property, provided those improvements are still reflected in the property when you sell it; and
• any available reliefs, such as Private Residence Relief if the property was your main home for part of the time you owned it.

An extension or loft conversion can count as a capital improvement, but routine repairs and maintenance won’t. You also can’t claim the same expenditure against both your rental income and your capital gain.

Any allowable capital losses can then reduce your taxable gains, and individuals also have an annual Capital Gains Tax exemption.

Current rates and allowances (2026/27)

For 2026/27, Capital Gains Tax is charged at:

• 18% to the extent that your taxable income and gains fall within the basic-rate band; and
• 24% on the balance above it.

The annual exempt amount is £3,000 per person for 2026/27, down substantially from £12,300 as recently as 2022/23 (and nobody is expecting it to go back up).

If you own the property jointly, each owner calculates the gain on their own beneficial share. Each of you will have your own £3,000 annual exemption and your own tax band to work against, so the way the ownership is split can affect the overall tax bill.

For married couples and civil partners who are living together, transferring an interest between spouses before a sale can sometimes be useful for Capital Gains Tax planning. But this needs to be done before the disposal takes place, normally before exchange of contracts, and different tax consequences can arise for transfers between people who aren’t married or in a civil partnership.

Full detail on rates and reliefs is on GOV.UK’s Capital Gains Tax pages.

The 60-day reporting and payment deadline

For UK residents, if the sale of a UK residential property gives rise to Capital Gains Tax, the disposal will normally need to be reported to HMRC and the estimated CGT paid within 60 days of completion.

The reporting regime was introduced in April 2020 with a 30-day deadline. The deadline was increased to 60 days for completions on or after 27 October 2021.

There’s an important distinction between exchange and completion. The 60-day reporting clock starts from completion, but for a normal unconditional property sale, the disposal date for Capital Gains Tax purposes is usually the date contracts are exchanged. That exchange date normally determines which tax year the gain falls into.

In practical terms, this means a sale that exchanges on 1 April 2027 and completes on 10 April 2027 will fall into the 2026/27 tax year, even though the 60-day clock won’t start running until 10 April.

The report is made through HMRC’s UK Property service, which is separate from your normal Self Assessment tax return.

Miss the 60-day reporting deadline where a return is required and an initial £100 late-filing penalty can apply, with further penalties and interest that can soon mount up as the delay continues.

If you complete a Self Assessment tax return, the disposal is also included on your return for the relevant tax year. Any CGT already paid through the UK Property service is taken into account when your final liability for the year is calculated, so you won’t pay the same tax twice.

Where landlords most often trip up

• Confusing exchange and completion. Completion starts the 60-day reporting deadline, but exchange is normally the CGT disposal date and determines the tax year. They’re two different dates doing two different jobs.
• Forgetting to include allowable costs. Buying and selling costs can reduce the gain, and they’re easy to lose track of when they were paid many years apart.
• Missing capital improvements. Extensions and other qualifying improvements can reduce the gain, but routine repairs and maintenance can’t. Keeping records and invoices for major work on the property could make a real difference years later when you come to sell (that invoice for the 2011 loft conversion is suddenly worth finding).
• Assuming the whole gain is tax-free because they once lived there. Private Residence Relief only covers the periods when the property was your only or main residence, together with certain deemed periods of occupation and the final-period exemption.
• Assuming old Lettings Relief rules still apply. Lettings Relief is now much more restricted than it used to be. Broadly, it’s only available where the owner shared occupation of the home with a tenant, not simply because a former home was later let out.
• Not realising joint ownership is split for tax purposes. Each owner is taxed on the gain relating to their beneficial share, using their own annual exempt amount and tax bands. The ownership structure can affect the overall CGT bill, but any planning needs to happen before the disposal, not once contracts have already been exchanged.

So there’s more to it than the difference between what you paid and what you sold for. When you sell, who owns what, whether you ever lived there and what you’ve spent on the place along the way can all change the final bill. And once completion has happened, the 60-day clock is already running.